Why Your Credit Score Is So Important
What is your credit score? Basically, it’s a score that determines your credit worthiness. The higher your credit score, the more credit worthy you are deemed to be.
It is something that every consumer needs to know, whether they have a credit card or not. Your credit score, to a large extent, will determine your life style.
It determines, if you will get a loan or not. If you do get a loan, it has an impact on how much interest you will pay. Your credit score can determine if you are offered special credit card deals such as 0 apr cards, bonus miles, and so on. And it determines whether you will be able to buy a home or if you will be forced to rent.
So, since this score is apparently so important, what exactly determines your credit score?
A number of factors go into determining one’s credit score. Probably, first among them is your payment history. A late payment on your bill will drive your credit score down. The later it is, the more it is driven down. Multiple late payments drive this score down even further. Bottom line – if you don’t want your credit score to go down, don’t be late making your payments.
If you have a high debt to balance ratio, this will also drive your credit score down. That is, the closer you are to the maximum limit on your cards, the lower your credit score will tend to be.
Lastly, how long have you had credit? Or, more precisely, how long have you been in their database? A college student or a person who buys everything with cash will have a lower score than someone in their 60′s who has had credit since 19.
Learn more about Susanna’s thoughts on applying for college credit cards and credit card bad credit ratings from her site.
This entry was posted on Friday, February 26th, 2010 at 4:39 am and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.